C.sampathkumar v. The Deputy Commissioner Of Income Tax Central Circle Ii(4), Chennai – 34

DATED: 19.10.2011 THE HON'BLE MR.JUSTICE P.JYOTHIMANIANDTHE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA C.Sampathkumar..AppellantVs. The Deputy Commissioner of Income TaxCentral Circle II(4), Chennai – 34. ..Respondent Appeal under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal Chennai 'A' Benchdated 28.1.2004 made in IT (S&S) A No.6/Mds/2001 for the block periodfrom 1986-1987 to 1996-1997. (GIR NO.24704S, dated 12.2.2001, on thefile the Deputy Commissioner of Income Tax, Central Circle (II) 4,Chennai-34. This appeal under Section 260A of the Income Tax Act, 1961 (forshort, "the Act") is at the instance of the assessee and is directedagainst the order dated 28.1.2004 passed by the Appellate Tribunal inIT (S&S) A No.6/Mds/2001 for the block period from 1986-1987 to 1996-1997. The appeal was admitted on the following questions of law:"1. Whether the Tribunal is correct in upholding theorder of the block assessment both on the assumption ofjurisdiction and on the point of limitation as envisagedin Chapter XIV-B of the Act? 2. Whether the Tribunal is correct in rejecting thegrounds challenging the validity of the assessment underconsideration on the point of limitation prescribed inSection 158BE of the Act? https://hcservices.ecourts.gov.in/hcservices/ 3. Whether the Tribunal is correct in confirming thejurisdiction to frame the block assessment in spite ofdefinition of undisclosed income prescribed in the saidchapter and further in spite of the fact that theadditions were not linked to the result of the searchespecially with reference to seized materials/documentsif any?" 2. By the order under challenge, the Tribunal has remanded thematter to the Assessing Authority for fresh consideration. However,the learned counsel on either side are not in a position to informthis Court as to whether any order has been passed by the AssessingAuthority pursuant to the remand. 3. The learned counsel appearing for the appellant hasrestricted the appeal only in respect of the period of limitation. 4. The issue relates to the block assessment against theassessee for the period from 1986-1987 to 1996-1997 made underSection 144 read with Sections 158BC and 158BD of the Act. On19.1.1996, when a search was conducted on one A.N.Dyaneswaran, whowas holding the post of Chairman-cum-Managing Director of Tamil NaduMinerals Limited, the assessee, who happens to be his close friendand a non-practicing Chartered Accountant, arrived at the scene. Itwas at that time the Department has effected search on the assessee,which resulted in seizure of cash of ` 2.16 Lakhs and US$ 5014, andvarious other documents which indicated that the assessee had beenhelping the said A.N.Dyaneswaran in certain activities relating tothe Trust created by Dr.Dharmambal, mother of A.N.Dyaneswaran. 5. The contention raised by the learned counsel for the assesseeis that when search was conducted on the assessee, which is wellwithin the power of the authority as per Section 132(1)(B)(iia) ofthe Act which enables such search even on any third person, theassessment order was passed on 12.2.2001 and that is beyond theperiod of limitation prescribed under the Act. In this regard, it isrelevant to extract Section 132(1)(B)(iia) of the Act, which is asfollows: "Section 132. Search and seizure.(1) ...(B) ...(iia) search any person who has got out of, or is aboutto get into, or is in, the building, place, vessel,vehicle or aircraft, if the authorised officer hasreason to suspect that such person has secreted abouthis person any such books of account, other documents,money, bullion, jewellery or other valuable article orthing" "Section 132. Search and seizure.(1) ...(B) ...(iia) search any person who has got out of, or is aboutto get into, or is in, the building, place, vessel,vehicle or aircraft, if the authorised officer hasreason to suspect that such person has secreted abouthis person any such books of account, other documents,money, bullion, jewellery or other valuable article orthing" 6. It is seen from the order of the Tribunal that the assessmenthas been effected under Section 158BD of the Act, which is as follows:"Section 158BD. Undisclosed Income of any other person:Where the Assessing Officer is satisfied that anyundisclosed income belongs to any person, other than theperson with respect to whom search was made underSection 132 or whose books of account or other documentsor any assets were requisitioned under Section 132A,then, the books of account, other documents or assetsseized or requisitioned shall be handed over to theAssessing Officer having jurisdiction over such otherperson and that Assessing Officer shall under Section158BC against such other person and the provisions ofthis Chapter shall apply accordingly." The period of limitation for such assessment contemplated underSection 158BE(2)(a) of the Act, which is as follows, is one year fromthe end of the month in which the notice under the Chapter was served."Section 158BE. Time limit for completion of blockassessment.(1) ...(2) ...(a) one year from the end of the month in which thenotice under this Chapter was served on such otherperson in respect of search initiated or books ofaccount or other documents or any assets requisitionedafter the 30[th] day of June, 1995, but before the 1[st] dayof January, 1997" 7. Even though it is the contention of the learned counsel forthe assessee that the date of search, namely 19.1.1996, should betaken into consideration for the purpose of reckoning the period oflimitation, in which event the assessment order will be beyond theperiod of limitation, it is seen and not in dispute that the noticewas issued to the petitioner on 28.11.1996, as elicited by theTribunal in the impugned order. If 28.11.1996 is taken intoconsideration for reckoning the period of limitation, the assessmentis made within time. 8. It is relevant to point out that in the writ petition filedby the assessee himself against the action taken under the ForeignExchange Regulation Act, this Court granted interim stay on19.11.1997, which came to be vacated on 12.1.2001. It was admittedlyafter vacating the stay order, the assessment order came to bepassed, which is on 12.2.2001, which is well within the period oflimitation as per the provision extracted above. In fact, theTribunal has considered this aspect and held categorically that the https://hcservices.ecourts.gov.in/hcservices/ order of assessment passed is well within the period of limitation.The relevant portion of the order of the Tribunal is as follows: 8. It is relevant to point out that in the writ petition filedby the assessee himself against the action taken under the ForeignExchange Regulation Act, this Court granted interim stay on19.11.1997, which came to be vacated on 12.1.2001. It was admittedlyafter vacating the stay order, the assessment order came to bepassed, which is on 12.2.2001, which is well within the period oflimitation as per the provision extracted above. In fact, theTribunal has considered this aspect and held categorically that the https://hcservices.ecourts.gov.in/hcservices/ order of assessment passed is well within the period of limitation.The relevant portion of the order of the Tribunal is as follows: "24. Coming to the objection that the assessee's casedoes not fall within the ambit of Section 158BC readwith Section 158BD, it is submitted that the steps weretaken to bring under Section 158BD rightly. Coming tothe objection of the assessee with regard to the lapseof time, it is the submission of the revenue that in thecase of the assessee, the date of service was 28.11.1996and the assessment was to be completed on or before30.11.1997. The date of the order of the Hon'ble HighCourt for stay was 19.11.1997 and the stay was vacatedon 12.1.2001. Therefore, the stay period works out to1536 days whereas the total available period includingthe stay is 1536 days and hence the assessment ordersince passed within 1535 days, it is in order and intime. Even otherwise, the Hon'ble High Court's ordervacating the stay was received in the Commissioner'soffice on 1.2.2001. The limitation for passing theblock assessment expires on 12.2.2001. Hence, theassessment was completed on that date." 9. No other point has been urged by the assessee except the For the foregoing reasons, we answer the substantial questionsof law against the assessee. The appeal stands dismissed. No costs. Sd/ Asst. Registrar /true copy/ Sub Asst.Registrar sasiTo: The Assistant Registrar, Income Tax Appellate TribunalChennai Bench "A", Chennai. 2.The Deputy Commissioner of Income Tax Central Circle II(4), Chennai – 34.